Boeing wins $3.6 billion order for planes from Singapore Airlines

Carrier will purchase 18 777 models over five years, rejects maker's newer 7E7

August 26, 2004|By BLOOMBERG NEWS

CHICAGO - Boeing Co., the world's second-biggest maker of commercial aircraft, won a $3.6 billion order for 18 planes yesterday from Singapore Airlines Ltd., which decided not to buy any of Boeing's new 7E7 model.

Singapore Airlines said it signed a letter of intent to take delivery of the 777-300ER models between 2006 and 2010. The model holds 365 passengers and can fly as far as 8,500 miles. The airline also acquired options for 13 more.

Boeing has won orders for 159 planes this year, while Airbus SAS, based in Toulouse, France, has sold 117. Both companies expect to increase aircraft production in the next two years as traffic rises and airlines become more profitable. Singapore Airlines has 55 777s in its fleet of 89 aircraft, which includes 29 Boeing 747s and five Airbus A340-500s.

"Flying direct on longer routes is becoming a trend and that's why Singapore Airlines is moving in that direction," said Chan Hock Fai, who helps manage $2.3 billion at Singapore-based APS Asset Management. "The industry is getting more challenging because of the budget carriers, and that's going to lower volume and margins for the existing airlines for the shorter routes."

Boeing's shares rose $1.59, or 3.1 percent, to close at $52.50 yesterday on the New York Stock Exchange. The shares have risen 43 percent over the past year.

Boeing's order total doesn't include the Singapore Airlines agreement because it isn't final. Including the options, the order is worth about $7 billion, for a total of 31 planes.

The airline decided not to buy Boeing's new 7E7 "Dreamliner" because the plane did not meet its "financial criteria," Singapore Airlines said.

Boeing is counting on Asian carriers to buy the 200-seat to 300-seat 7E7 because of the long routes they tend to fly. Boeing recorded its first 7E7 order in July from Tokyo-based All Nippon Airways Co. for 50 7E7 models that Boeing says will be more fuel-efficient and comfortable than similar-size planes.

Singapore Airlines, which operates 87 passenger aircraft, is focusing on improving service on flights to London, Los Angeles and other intercontinental routes as no-frills airlines such as Malaysia's AirAsia Sdn. and Singapore-based Valuair Ltd. expand in Southeast Asia.

Singapore Airlines, which plans to buy the planes with cash, said it would also consider leasing or debt financing.

General Electric Co. will supply GE90-115B engines for the new planes, which will be its first from Singapore Airlines. The engine order, including spares, is worth $800 million, General Electric said.

Dubai-based Emirates, which plans to double its fleet to 139 planes by 2011, bought four 777 aircraft last month with an option for nine more. Hong Kong-based Cathay Pacific has said it plans to buy and lease eight new planes from Boeing and larger rival Airbus to expand in the Asia-Pacific.

Airlines are trying to reduce their costs, including spending on aircraft, as fuel prices soar to record highs, analysts said.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.